China’s Disappearing Ship: The Latest Headache for Global Supply Chains

Analysts say they started noticing a drop in shipping traffic in late October, as China prepared to enact a data privacy management law.

Typically, shipping data companies are able to track ships worldwide because they are equipped with an Automatic Identification System, or AIS, transceiver.

The system allows ships to send information – such as position, speed, course and name – to stations stationed along the coast using high-frequency radio. If a ship is out of range of those stations, information can be exchanged via satellite.

But that’s not happening in the world’s second-largest economy, a key player in global trade. Over the past three weeks, the number of ships sending signals from the country has dropped by nearly 90%, according to data from global shipping data provider VesselsValue.

“We are currently seeing a drop in AIS terrestrial signal across the industry in China,” said Charlotte Cook, trade analyst at VesselsValue.

    A cargo ship is seen at Yangshan Deep Water Port in Shanghai last October.  Shipping data companies say they have lost information about ships in Chinese waters in recent weeks.

New data law could exacerbate supply chain chaos

Asked about the matter, China’s foreign ministry declined to comment. The State Council Information Office, which serves as the cabinet’s press office, did not immediately respond to a request for comment on why transportation providers lost access. into the data.

But analysts say they have found the culprit: Law on protection of personal information, effective November 1, it requires data processing companies to obtain approval from the Chinese government before they can let personal information leave Chinese soil – a rule reflects fears in Beijing that such data could fall into the hands of foreign governments.

The law does not cover shipping data. But Chinese data providers may be withholding the information as a precaution, according to Anastassis Touros, AIS network leader at Marine Traffic, a large ship-tracking information provider.

“Whenever you have a new law, we have a period where people need to check that everything is OK.” Touros said.

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Other industry experts have more clues as to the effect of the law. Cook said that colleagues in China told her that some AIS transponders had been removed from stations along the Chinese coast earlier this month, at the behest of the national security agency. The only systems allowed still need to be installed by “qualified parties”.

Not all data is gone: Satellites can still be used to pick up signals from ships. But Touros says that when a ship is close to shore, the information gathered in space will not be as good as what can be collected on the ground.

“We need ground stations for better, higher quality images,” he added.

As Christmas approaches, the loss of information from mainland China – home to six of the world’s 10 busiest container ports – could create more problems for the already struggling global shipping industry. towel. Supply chains are under strain This year as severely congested ports struggled to keep up with the rapidly recovering cargo demand.
Moody's analysis said:

According to Cook from VesselsValue, shipping companies rely on AIS data to predict ship movements, track seasonal trends, and improve port efficiency. The lack of Chinese data “could significantly affect ocean supply chain visibility across China,” she said. The country is one of the world’s major importers of coal and iron ore, as well as a major exporter of containers.

“As we move into the Christmas period, it’s going to have a really big impact on [supply chains] and this is the most important factor right now,” said Georgios Hatzimanolis, communications strategist at Marine Traffic. He expects the “minute by minute” loss of vessel data “from China to have” a major impact on the supply chain. response”, as companies can lose important information about arrival, discharge and disembarkation times.

Global supply chains are under “great strain,” he added. “It doesn’t need another element to make it harder.”

Ningbo-Zhoushan Port as seen in August.  Experts fear that the lack of shipping data out of China could strain global supply chains.

China is self-isolating

China’s desire to retain absolute control over all data and information within its borders is not surprising, as President Xi Jinping continues to reassert Communist Party dominance. ruling over all economic and social aspects.

The country has been promoting economic self-sufficiency in the face of external threats, such as US sanctions on important technology.
Mr. Xi emphasized his goal of self-reliance in previous and future years a fierce trade and technology war with former US President Donald Trump. For example, it is the point of “Made in China 2025,” an ambitious plan to push China’s manufacturing sector into more technologically advanced areas.
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Several top officials in Beijing have recently attempted to quell concerns among global investors that the country is isolating itself from the rest of the world because of national security priorities.

China’s vice-president Wang Qishan, seen as a staunch ally of Mr. Xi, told the Bloomberg New Economic Forum in Singapore that China would not “develop isolated from the world.” Speaking via video, he also urged countries to keep supply chains “stable and smooth.”

But China has embraced policies during the coronavirus pandemic that often appear to do otherwise.

During the pandemic, for example, Mr. Xi has doubled down on his push for self-reliance, emphasizing the need to create supply chain “independent and controllable” to ensure national security.
And the country’s far-reaching control over technology expanding this summer for foreign IPOs, when the Cyberspace Administration of China propose that large companies with more than a million customers seek approval before listing shares abroad. As with recent data privacy legislation, the agency cited concerns about whether personal data held by such companies could be exploited by foreign governments.

However, China’s actions this year could come at a cost if it goes too far in trying to protect itself from foreign interference.

“If China is really serious about promoting transparency, reconnecting or staying connected to the world … then it has absolutely no reason to create regulations that restrict data. This is launched,” said Hatzimanolis of Marine Traffic. . “If we don’t have a vision of when ships arrive in China and when they leave … the whole supply chain will become more fragmented.”

– Beijing’s CNN bureau contributed to this report.


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